Funding an overseas property purchase from China: what the published rules actually say.

What is China's annual foreign exchange facility for an individual?

USD 50,000 equivalent per person per year. Article 2 of SAFE's Detailed Rules sets that annual total amount for a domestic individual buying foreign exchange, and a separate annual total amount of the same size for settling foreign exchange into renminbi.

Two amounts, counted separately. The Detailed Rules for the Implementation of the Measures for the Administration of Individual Foreign Exchange (Huifa [2007] No. 1, 5 January 2007) set an annual total amount equivalent to USD 50,000 per person per year for purchase, and the same for settlement. SAFE's own press briefing on those rules records the individual purchase amount being raised to USD 50,000, and its 2017 media answers restate the same figure and note that spending or withdrawing on a bank card overseas does not offset it.

Above the annual amount, the rules require the bank to examine the authenticity of the transaction against supporting documents for the specific purpose being claimed.

Is buying property abroad a permitted use of that facility?

No. SAFE's Application Form for Individual Purchase of Foreign Exchange states that purchased foreign exchange must not be used for overseas property purchase, securities investment, life insurance and investment-return insurance, or other capital account items that are not yet open.

The facility sits on the current account side of the rules. The purposes printed on SAFE's application form are current account items: travel, study abroad, medical treatment and similar. Buying residential property abroad is a capital account item, and the form says in terms that the foreign exchange bought under the facility is not for it.

The Detailed Rules are built the same way. Their capital account chapter lists the individual capital account transactions that are provided for, such as outbound direct investment with SAFE registration, purchases through qualified domestic institutional investors, and employee share schemes, each with its own approval or registration step. A purchase of residential property abroad by an individual is not among them.

This page states the published rule and stops there. It does not describe, rank or evaluate any method of doing anything other than what the rule allows, and nothing here should be read as a route.

What does that mean in practice for someone planning to buy abroad?

It puts funding first in the sequence, not last. Before committing to a property, a mainland buyer needs the route confirmed in writing by a licensed bank and a qualified adviser in China, for the full amount, in the buyer's own name, on the actual payment dates.

• Lawful. Whether any route exists for a given person depends on that person's own circumstances, residence and source of funds. It is a question for a licensed bank in China and a qualified adviser, and this page deliberately does not answer it.
• In your own name. The destination records who sent the money. If the payer is not the buyer, the destination's own paperwork can fail even where the money itself arrives.
• In time. A deposit date and a balance date are fixed by the contract you sign. A funding route that works in six months does not help a contract that completes in six weeks.

Settle all three before you sign anything, because a contract signed first turns an open question into a deadline.

Why does the destination's paperwork depend on the funding route?

Because the destination records the remitter. In Thailand the receiving Thai bank issues the Foreign Exchange Transaction form, and Section 19 ter of the Condominium Act asks a foreign buyer for evidence of foreign currency brought into the country in an amount not less than the price of the unit.

The form, usually called the FET, comes from the receiving Thai bank and not from the bank the money was sent from. Thai banks issue it as a matter of routine for a single inward transfer of USD 50,000 or more; below that the same bank issues a credit advice letter, which the Land Department accepts for the same purpose.

Two details on the wire itself decide whether the document is usable. The sender name has to match the buyer's passport name, and the purpose field should name the unit and the project. The full mechanics: the Thailand FET certificate, explained, and the statute behind it: Section 19 of the Condominium Act.

What happens to a purchase that cannot evidence the money's arrival?

It does not register. Without evidence that foreign currency of not less than the unit price arrived from abroad in the buyer's name, the Land Department will not register a Thai condominium unit to a foreign buyer on freehold title, whatever the sale contract says.

That is why the order matters. The contract creates the deadline, the bank creates the document, and the Land Office tests the document on the day. A buyer who signs first and asks about funding second has converted a question into a dated obligation.

The practical protection is drafting: have a Thai lawyer make the purchase conditional on the funding and the registration documents, before a deposit moves. The rest of the document set is on the Thailand condo due diligence checklist.

What should a buyer ask their bank and adviser before committing?

Four questions. Can the full amount lawfully reach the destination. Can it arrive in my own name. Can it arrive by the contract dates. What will the receiving bank need from me to issue the document the destination requires.

1. Can the full purchase amount lawfully reach the destination country, on my own facts.
2. Can it arrive as a payment from me, so the destination's record names me as the remitter.
3. Can it arrive by the deposit date and by the balance date in the contract I am being asked to sign.
4. What documents will the receiving bank need before it issues the evidence of inward foreign currency that the destination asks for.

Take the answers in writing. If any of the four is still open, the purchase is not ready to sign, and that is a cheaper conclusion before a deposit than after one.

Header photo: Unknown, CC0, via Wikimedia Commons. All credits: image credits.